Jabil (JBL)

Electronics manufacturing services provider Jabil (NYSE:JBL) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 18.5% year on year to $8.25 billion. On top of that, next quarter’s revenue guidance ($8 billion at the midpoint) was surprisingly good and 7.5% above what analysts were expecting. Its non-GAAP profit of $3.29 per share was 11.7% above analysts’ consensus estimates.

Company Overview

With manufacturing facilities spanning the globe from China to Mexico to the United States, Jabil (NYSE:JBL) provides electronics design, manufacturing, and supply chain solutions to companies across various industries, from healthcare to automotive to cloud computing.

The sector could see higher demand as the prevalence of advanced electronics increases in industries such as automotive, healthcare, aerospace, and computing. The high-performance components and contract manufacturing expertise required for autonomous vehicles and cloud computing datacenters, for instance, will benefit companies in the space. However, headwinds include geopolitical risks, particularly U.S.-China trade tensions that could disrupt component sourcing and production as the Trump administration takes an increasingly antagonizing stance on foreign relations. Additionally, stringent environmental regulations on e-waste and emissions could force the industry to pivot in potentially costly ways.

Jabil competes with other electronics manufacturing services providers including Foxconn (TPE:2317), Flex Ltd. (NASDAQ:FLEX), Sanmina Corporation (NASDAQ:SANM), and Celestica Inc. (NYSE:CLS).

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.

With $29.8 billion in revenue over the past 12 months, Jabil is a behemoth in the business services sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices. However, its scale is a double-edged sword because it’s harder to find incremental growth when you’ve penetrated most of the market. To expand meaningfully, Jabil likely needs to tweak its prices, innovate with new offerings, or enter new markets.

As you can see below, Jabil grew its sales at a sluggish 1.8% compounded annual growth rate over the last five years. This shows it failed to generate demand in any major way and is a rough starting point for our analysis.

Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. Jabil’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 7.3% annually.

This quarter, Jabil reported year-on-year revenue growth of 18.5%, and its $8.25 billion of revenue exceeded Wall Street’s estimates by 9.5%. Company management is currently guiding for a 14.4% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 3% over the next 12 months. Although this projection suggests its newer products and services will catalyze better top-line performance, it is still below the sector average.

Jabil’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 4.6% over the last five years. This profitability was lousy for a business services business and caused by its suboptimal cost structure.

Looking at the trend in its profitability, Jabil’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Jabil generated an operating margin profit margin of 4.1%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Jabil’s EPS grew at an astounding 27.5% compounded annual growth rate over the last five years, higher than its 1.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Jabil, its two-year annual EPS growth of 6.5% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q3, Jabil reported adjusted EPS of $3.29, up from $2.30 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Jabil’s full-year EPS of $9.78 to grow 10.6%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Jabil has shown weak cash profitability over the last five years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 3.1%, subpar for a business services business.

Taking a step back, an encouraging sign is that Jabil’s margin expanded by 2.2 percentage points during that time. The company’s improvement shows it’s heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose while its operating profitability was flat.

Jabil’s free cash flow clocked in at $505 million in Q3, equivalent to a 6.1% margin. This cash profitability was in line with the comparable period last year and above its five-year average.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although Jabil hasn’t been the highest-quality company lately because of its poor top-line performance, it found a few growth initiatives in the past that worked out wonderfully. Its five-year average ROIC was 33.9%, splendid for a business services business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Jabil’s ROIC has increased significantly over the last few years. This is a good sign, and we hope the company can keep improving.

Jabil reported $1.93 billion of cash and $3.37 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $2.1 billion of EBITDA over the last 12 months, we view Jabil’s 0.7× net-debt-to-EBITDA ratio as safe. We also see its $54 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly Jabil blew past analysts’ EPS guidance for next quarter expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this quarter featured some important positives. The market seemed to be hoping for more, and the stock traded down 2.5% to $219.60 immediately after reporting.

Updated: December 4, 2025 at 10:28 PM EST

Before investing in or passing on Jabil, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

Jabil’s business quality ultimately falls short of our standards. For starters, its revenue growth was weak over the last five years. And while its scale makes it a trusted partner with negotiating leverage, the downside is its operating margins reveal poor profitability compared to other business services companies. On top of that, its low free cash flow margins give it little breathing room.

Jabil’s P/E ratio based on the next 12 months is 19.3x. Investors with a higher risk tolerance might like the company, but we think the potential downside is too great. We're pretty confident there are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $245.63 on the company (compared to the current share price of $218.77).